Archive

August 3, 2016

New York announced that Keisha Relf Davis, a New York State Department of Education vocational counselor, pleaded guilty to taking part in a scheme that stole over $2.3 million from New York State. As part of the scheme, Relf Davis, in exchange for cash bribes, approved students for the Office of Adult Career and Continuing Education Services’ Vocational Rehabilitation Program (“ACCES-VR”), although these students never applied to the program. The ACCES-VR program was created to help eligible New Yorkers with disabilities and functional limitations gain self-dependence through education, training, and employment. Relf Davis knew that the students she approved did not have disabilities or functional limitations to qualify for this program. NY

July 21, 2016

New Jersey filed an action against an Ocean County home improvement contracting company and two of its owners for allegedly taking more than $1.1 million from Superstorm Sandy victims – including over $898,000 in federal relief grants – and failing to begin or complete the contracted-for work. The Price Home Group Limited Liability Company of Manahawkin, and its owners Jonathan Price of Manahawkin, and Scott Cowan of Demarest, took significant initial payments to elevate or replace Sandy-damaged homes then failed to begin work, performed the work in a substandard manner and/or abandoned unfinished projects without returning for weeks, months, or at all, according to the state’s Complaint filed in Ocean County Superior Court. NJ

July 14, 2016

Columbia University agreed to pay $9.5 million to resolve charges it violated the False Claims Act for improperly seeking and receiving excessive cost recoveries in connection with research grants funded by the National Institutes of Health (NIH).  According to the government, Columbia impermissibly applied its “on-campus” indirect cost rate, instead of the much lower “off-campus” indirect cost rate, when seeking federal reimbursement for 423 NIH grants where the research was primarily performed at off-campus facilities owned and operated by the State of New York and New York City.  The government further alleged Columbia failed to disclose to NIH that it did not own or operate these facilities and that Columbia did not pay for use of the space for most of the relevant period.  The allegations originated with a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive a yet-to-be-determined whistleblower award from the proceeds of the government's recovery.  DOJ (SDNY)

July 13, 2016

A Kentucky federal court entered a civil judgment of roughly $4.5 million against Vesta Brue and her medical device companies LifeTechniques, Inc. and Care Team Solutions LLC for violating the False Claims Act by making false statements that allowed them to receive millions of dollars in federal grants from the National Institutes of Health (NIH).  According to the settlement agreement, NIH awarded Brue and her companies five Small Business Innovation Research grants, worth millions of dollars, to support the development of electronic pillboxes customized for specific patient populations, including HIV and pediatric patients.  But Brue and her companies acknowledged that Brue spent the grant money on personal expenses, such as plastic surgery, jewelry, home renovations, and massages, among other expenses.  She also used grant money on business expenses not allowed under the grant regulations, such as costs associated with marketing and promoting her businesses.  DOJ (EDKY)

July 13, 2016

Clothing importer Motives, Inc. and its affiliated foreign clothing manufacturers Motives Far East and Motives China Ltd. agreed to pay $13.375 million to settle charges of violating the False Claims Act by engaging in a double invoicing scheme to defraud the United States out of millions of dollars in customs duties.  As part of the settlement, the companies admitted to and accepted responsibility for under-reporting the value of its imported merchandise.  Under the scheme, the companies used two sets of invoices: one that undervalued the garments and was presented to the government for calculation of the appropriate customs duty, and the second that reflected the actual value of the garments.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive a yet-to-be-determined whistleblower award from the proceeds of the government's recovery.  DOJ (SDNY)

July 8, 2016

California announced that the Bureau of Children’s Justice and False Claims Unit of the California Department of Justice has reached a settlement agreement with K12 Inc., a for-profit online charter school operator, and the 14 affiliated non-profit schools known as the California Virtual Academies (“CAVA Schools”) that it manages, over alleged violations of California’s false claims, false advertising and unfair competition laws. As part of the settlement, which is subject to court approval, K12 will provide approximately $160 million in debt relief to the non-profit schools it manages—“balanced budget credits” that were accrued by the schools as a result of the fee structure K12 used in its contracts—and will pay $8.5 million in settlement of all claims. In addition, K12 has agreed to implement significant reforms of its contracts with the CAVA Schools, undergo independent reviews of its services for students with disabilities, ensure accuracy of all advertisements, and provide teachers with sufficient information and training to prevent improper claiming of attendance dollars. CA

June 2, 2016

Aquatic Sensor Network Technology (Aquasent)and several of its officials and employees, namely Dr. Jun-Hong Cui, Dr. Yong Ma, Dr. Shengli Zhou, Dr. Zhijie Shi, and Juanjuan Liao, agreed to pay $400,000 to resolve allegations they violated the False Claims Act in the management of federally-funded grants awarded to Aquasent by the National Science Foundation.  DOJ (DCT)

June 2, 2016

The SEC announced fraud charges and an asset freeze against Charles C. Liu, his wife Xin “Lisa” Wang, and their companies Pacific Proton Therapy Regional Center, Pacific Proton EB-5 Fund, and Beverly Proton Center LLC.  The SEC’s complaint alleges that Liu and Wang raised $27 million for a proton therapy cancer treatment center in Southern California from 50 investors in China through the EB-5 immigrant investor program.  They touted in promotional materials that the project would create more than 4,500 new jobs and have a substantial impact on the local economy while giving foreign investors an opportunity for future U.S. residency.  But presently there is no construction at the proposed site after more than 18 months of collecting investments.  Meanwhile, Liu has transferred $11 million in investor funds to three firms in China and diverted another $7 million to his and his wife’s personal accounts.  SEC

May 25, 2016

Florida and the Federal Trade Commission announced two joint actions against alleged unlawful debt relief operations targeting student loan holders. In the first action, the enforcement agencies filed a joint action against Chasity Valdes and her companies, Consumer Assistance LLC, Consumer Assistance Project Corp. and Palermo Global LLC, alleging that the defendants took illegal up-front fees in return for their purported debt relief and credit repair services that they falsely claimed would reduce consumers’ student loan debt and repair the consumers’ credit. According to the complaint, the defendants led consumers to believe they qualified for government student loan forgiveness programs that would result in a reduction of their student loan debt, even though the programs have strict requirements that the consumers were likely not to meet. The complaint also alleges defendants misrepresented that they would audit consumers’ loans for errors that would invalidate the loans or reduce the balance, when in reality, at most, defendants merely sent worthless form dispute letters. FL

May 25, 2016

The FTC and the State of Florida have taken action against the Consumer Assistance LLC, Consumer Assistance Project Corp. and Palermo Global LLC with running phony student loan debt relief schemes, and defendants in a similar FTC action brought earlier this year have agreed to a ban on participating in any debt relief business, as part of a consumer protection crackdown to combat such frauds. “The FTC is not going to stand on the sidelines when it uncovers evidence of fraudsters targeting students,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Consumers should be wary of any company that claims it can eliminate or greatly reduce debt, especially if they ask for money in advance.” FTC